Correlation Between First Graphene and Versarien Plc

Can any of the company-specific risk be diversified away by investing in both First Graphene and Versarien Plc at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Graphene and Versarien Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Graphene and Versarien plc, you can compare the effects of market volatilities on First Graphene and Versarien Plc and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Graphene with a short position of Versarien Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Graphene and Versarien Plc.

Diversification Opportunities for First Graphene and Versarien Plc

0.4

Correlation Coefficient

First Graphene  Versarien Plc

Very weak diversification

The 3 months correlation between First and Versarien is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and Versarien plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Versarien plc and First Graphene is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Graphene are associated (or correlated) with Versarien Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Versarien plc has no effect on the direction of First Graphene i.e., First Graphene and Versarien Plc go up and down completely randomly.

Pair Corralation between First Graphene and Versarien Plc

Assuming the 90 days horizon First Graphene is expected to under-perform the Versarien Plc. But the otc stock apears to be less risky and, when comparing its historical volatility, First Graphene is 4.34 times less risky than Versarien Plc. The otc stock trades about -0.03 of its potential returns per unit of risk. The Versarien plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.10  in Versarien plc on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Versarien plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

First Graphene  vs.  Versarien plc

First Graphene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Graphene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Versarien plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Versarien plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Versarien Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Graphene and Versarien Plc

The main advantage of trading using opposite First Graphene and Versarien Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Graphene position performs unexpectedly, Versarien Plc can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Versarien Plc will offset losses from the drop in Versarien Plc's long position.

The idea behind First Graphene and Versarien plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.